Advertisement

Blog

Chinese Manufacturing Slows on Drop in Orders

Chinese manufacturing and export orders continued to fall in May, and the deceleration is expected to continue for at least the next several months, according to the results of a monthly survey by banking giant {complink 6453|HSBC Holdings plc}.

Manufacturing conditions have deteriorated in China over the last seven months as demand from Europe withered in the face of continued economic weakness in Europe and fiscal debt-related crisis at several of the region's leading economies. Exports into the United States have also come under pressure in recent months, pushing down the HSBC Flash Manufacturing Purchasing Managers' Index (PMI) to a seven-month low. In June, new export orders decelerated at the fastest pace since March 2009, HSBC said.

“China's manufacturing sector continued to slow in June, though the pace of slowdown seems to be slowing,” said Hongbin Qu, chief economist, China, and co-head of Asian Economic Research at HSBC, in a statement.

“With external headwinds remaining strong, exports are likely to decelerate in the coming months. The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers. All will likely weigh on the jobs market. As such, we expect more decisive policy stimulus to reverse the growth slowdown.”

HSBC said new orders, new export orders, and output are contracting at a “faster rate,” while other segments of the PMI, including stocks of purchases, quantity of purchases, and employment are contracting at a “slower rate.”

The Flash China PMI is based on 85 percent to 90 percent of survey responses from more than 420 manufacturing companies. HSBC conducts the survey in conjunction with Markit, a global financial services company.

9 comments on “Chinese Manufacturing Slows on Drop in Orders

  1. owen
    June 21, 2012

    I can't help but wonder if this will effect Chinese counterfeiting which has been booming.

  2. Himanshugupta
    June 22, 2012

    Or this can be counterfeiting, which is flooding the market so the original manufacturers are feeling the pain.

    But the report only give qualitative picture of the drop in orders and some quantitive report can help in gauging the problem. The Euro zone problems have been bugging the economy for more than 2 yrs now, i wonder when the situation will improve.

  3. Himanshugupta
    June 22, 2012

    Or this can be counterfeiting, which is flooding the market so the original manufacturers are feeling the pain.

    But the report only give qualitative picture of the drop in orders and some quantitive report can help in gauging the problem. The Euro zone problems have been bugging the economy for more than 2 yrs now, i wonder when the situation will improve.

  4. Barbara Jorgensen
    June 22, 2012

    Somehow, I don't think counterfeiting is counted in the GDP, although I could be wrong…

  5. Anand
    June 25, 2012

     I don't think counterfeiting is counted in the GDP

    @Barbara, you are right. GDP doesnt include gambling, smuggling, and counterfeiting. And that is the reason why GDP is not the most reliable measurement indicator.

  6. Anand
    June 25, 2012

     The Euro zone problems have been bugging the economy for more than 2 yrs now, i wonder when the situation will improve.

    @ Himanshugupta, I think things have definitely improved after Greece elections. Infact Dow jones is still above 12k levels which is bullish sign. Moreover emerging markets are rallying because oil prices are falling drastically. I believe by 2013 we will see the early signs of recovery.

  7. Barbara Jorgensen
    June 25, 2012

    LOL. Cynical, but so true.

  8. Mr. Roques
    June 26, 2012

    Do you have any stats on for how long had China been growing? The slow hasn't been catastrophic and at least its a global shrinkage, so when (?) it grows back, they would hope they grow with it.

  9. ahdand
    June 30, 2012

    China is catching up isnt it. The only difference that the chineese and the others have is that the thinking mentality. Chineese people always think ahead where as most of us who live in other countries do not bother to look beyond what we see. That is where China leads the way.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.